Bookkeeping

The Margin of Safety is the difference between budgeted sales and breakeven sales. A higher margin of safety percentage provides more leeway in adjusting sales targets or absorbing potential downturns. It’s especially important for businesses aiming to ensure stability and mitigate risk. The Margin of Safety (MOS) percentage measures how much sales can drop before […]

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The units of production method recognizes depreciation based on the perceived usage (“wear and tear”) of the fixed asset (PP&E). Depreciation is a non-cash expense that allocates the purchase of fixed assets, or capital expenditures (Capex), over its estimated useful life. Capitalized assets are assets that provide value for more than one year. Matching Principle […]

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Without the going concern principle, businesses would be forced to wind down operations and liquidate their assets immediately upon experiencing financial problems. A company may not be a going concern based on the financial position on either its income statement or balance sheet. For example, a company’s annual expenses may going concern concept example so […]

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